Based on two decisions of the German Federal Fiscal Court (XI R 25/12 and V R 6/13) regarding cross-border price discounts, the German Ministry of Finance has now completely revised sec. 17.2 of the German VAT Circular. What is pleasing is that the revision provides clarification that a recipient is not obliged to reduce its input VAT if the price reduction is granted by a supplier carrying out a supply of goods from other EU Member States or non-EU countries. However, what is not so pleasing is the extensive obligation to provide proof.

The Federal Supreme Court recently ruled, that tax evasion could be considered as already having been detected, even before the tax office has examined the relevant tax return. Once the tax crime is considered as detected, self-disclosure no longer offers exemption from punishment. This may also apply to VAT: When a VAT return requires correction, it might already be too late for a self-disclosure with the effect of exemption from punishment. The assumption of an intentionally committed tax evasion can be effectively prevented by the implementation of a Tax Compliance Management System.

It is difficult for corporations to establish the organizational integration for a VAT-group. Recently, the V. Senate of the Federal Fiscal Court interpreted this feature very strictly. Now, however, it is the V. Senate which, by judgment of 10 May 2017 – V R 7/16, has stated that an organizational integration is possible even in the absence of personnel interweaving of the executive bodies, if a controlling and profit-and-loss transfer agreement exists.